Fusion GPS Gets a Rude Awakening

Note to Fusion GPS: If you're going to mouth off to the media and ignore the public record, you'd better be prepared to have your confidential documents subpoenaed.

That's the takeaway from last week's ruling by Judge Richard J. Leon, district court judge from the U.S. District Court for the District of Columbia, denying Fusion GPS's request for a preliminary injunction against TD Bank. The injunction would have stopped the bank from complying with a subpoena for bank documents served by the House Intelligence Committee relating to the oppo research firm's financial transactions with media and political clients from the period coinciding with its retention of Christopher Steele to compile the Russian dossier. The judge rejected the firm's arguments, in no small part because grandstanding by its principals and by prominent Democrats directly contradicted the firm's claims to be a victim of First Amendment and due process violations.

In the wake of the ruling, Fusion's lawyer vowed to keep fighting, but the transfer since then of the 70 documents at issue mooted any possible appeal. While the dispute is now resolved, in an age of "notional accuracy" in reporting, Judge Leon's decision bears emphasis. For a refreshing change of pace, it stands as a mini-case study in the fecklessness of flash. It is a little jewel of a decision in a grand tiara of legal maneuverings that sparkles with the value of nerdy lawyering over media-driven cant.

Which chronically retold lies or misunderstandings caused Fusion's fall last week from the constitutional-defensive moral high ground it took in protesting the handing over of its bank records with clients who, according to the House Intel Committee, had Russian companies as their clients? They are simple. They relate to the original formation of the House Intel Committee's probe into Russian collusion, as well as of the House Ethics Committee's investigation of committee chairman Representative Devin Nunes.

The latter ethics investigation was brought last April in response to accusations filed against Nunes by "several left-wing activist groups" with the Office of Congressional Ethics. The complaints, of which Nunes has since been cleared, alleged that he had made unauthorized disclosures of classified information. These related to his briefing of the White House and press, before he spoke to the committee, about certain documents provided to him by administration officials purporting to show evidence of questionable unmasking by Obama administration officials. In response, Nunes volunteered to temporarily relinquish the running of the Russian investigation.

Afterward, he stepped away, as promised. But in the months that followed, Dems complained that the Republican-dominated committee probe was tainted, despite Nunes's "recusal," due to his continuing interference in the investigation. What was the nature of this interference? He continued to issue subpoenas on tributary matters – for instance, those relating to emerging new reporting on the Uranium One deal. All this happened before the showdown last week over the Fusion subpoena, but what is noteworthy is that the motion attempting to block the subpoena reprised Democrats' version of committee events.

Indeed, Fusion swallowed whole the Dems' negative propaganda from last spring in its effort to thwart the committee's examination of its financial transactions. Specifically, it contended in its motion to the district court that the committee never collectively passed the required formal public resolution authorizing its investigation into Russian collusion. Further, since Nunes had "recused" himself from the investigation, such as it was, in issuing the subpoena to TD Bank, he acted ultra vires, or "outside the scope of his authority."

Now, compare this legal theory to the exact wording of Nunes's April 2017 announcement of his stepping aside in the wake of the then newly filed ethics charges:

Despite the baselessness of the charges, I believe [that] it is in the best interests of the House Intelligence Committee and the Congress for me to have Rep. Mike Conaway, with assistance from Reps. Trey Gowdy and Tom Rooney, temporarily take charge of the committee's Russia investigation while the House Ethics Committee looks into this matter.

And then this all-important fillip:

I will continue to fulfill all of my other responsibilities as [c]ommittee [c]hairman, and I am requesting to speak to the Ethics Committee at the earliest possible opportunity in order to expedite the dismissal of these false claims.

That is exactly what happened. But as already mentioned, the Dems, and in particular California's Rep. Adam Schiff, continued to assert that Chairman Nunes (a) recused himself from the committee's probe and (b) continued to "disrupt" the committee's work by "issuing subpoenas on his own," though he had relinquished his authority as committee chairman. Both of these characterizations were expressly wrong, based on the exact wording above of Nunes's public announcement – wording, it turns out, that was not in the least haphazard or empty political-speak, but rather a precise roadmap of the powers Nunes would retain.

But this was not spelled out – until last week. Without apology, Nunes continued to issue subpoenas, including a new and more expansive one to Fusion based on the news that had been emerging in the press in the months since the committee had begun investigating. When this hit home, Fusion regurgitated the Dems' misstatements to the court. The catch was that such allegations must be referred to and compared against the set of rules governing the matter to which they relate.

This, Judge Leon pointed out, could be found in the rules of the House of Representatives, which devolve authority, including subpoena authority, upon each committee to set its own rules over the areas over which it has oversight. Since the House Intel Committee's responsibilities include oversight of "the activities of the intelligence community," its own committee rules controlled. These, in turn, plainly required two things: first, for the formation of any investigation, the approval of the chairman and the ranking minority member, and second, for the exercise of the subpoena power, the authorization and signature of the chair.

It now becomes obvious why Nunes formulated his temporary absence from the investigation the way he did. By specifically not recusing himself, and by explicitly retaining the chairmanship, he ensured in one fell swoop the retroactive validity of the formation of the investigation and its continuing subpoena issuances. Since the ranking minority member was Adam Schiff, who at the time of the investigation formation was calling for blood, both the chairman and the ranking minority member were on record as proffering the required approval. And by issuing subpoenas in his capacity as chair (from which he had not recused himself), Nunes guaranteed the enforceability of the committee's subpoenas, a status they would not have had if he had allowed himself to be cowed.

Why and how Fusion thought it could convince a judge of Nunes's lack of authority to issue the contested Fusion subpoena is a bit of a wonder. A good guess is that it never read the pertinent sets of black-letter rules. Either that or the principals were so smitten with their role in the grand scheme of all things Russian that they brought this action without fully grasping that the rules actually matter. On the contrary, the rules, like the public record of Nunes's completely kosher temporary abdication, not only mattered, but were dispositive. As Judge Leon wrote in his ruling, "[i]ndeed, the Subpoena would be invalid without Chairman Nunes's signature[.]"

It is also conceivable that Fusion's motion, with its easily dispatched grounds for a preliminary injunction, was just part of a larger stonewalling pattern that is only now coming to an end. If so, a pattern within the pattern of delay and obfuscation recently noted by Chairman Nunes in a letter to Rod Rosenstein regarding the DOJ and FBI is suggested here, where shopworn legal theories seemed to have been recycled from the Trump administration's enemies. But he who laughs last... And it is surely worth a guffaw or two that Fusion's last argument, that its "confidential client relationships" would be leaked by the committee, thereby violating its First Amendment freedom of association, was rejected by the court on the basis that Fusion had no proof that the committee was responsible for past leaks.

A final word about Fusion's First Amendment and due process claims. These are noteworthy because the defense of "privilege" was raised repeatedly during Glenn Simpson's compelled testimony, the transcript of which was just released by Senate Judiciary Committee member Dianne Feinstein. (See in particular here and here.) Again, Judge Leon made mincemeat out of this prong of the preliminary injunction motion asserting that the subpoena was impermissibly broad. He cited a completely different and harder to meet standard applicable to judicial review of congressional investigations (versus general subpoenas) than was cited in Fusion's letter to Senator Grassley erecting its First Amendment and due process bulwark. According to the judge, the committee had more than established the required nexus.

As for Fusion's related assertion that it had the First Amendment freedom-of-association right to protect its client list, Judge Leon blew this away with his own line of cases. These distinguished among political, economic, religious, and cultural groups like the NAACP, who are entitled to First Amendment privacy, and the vendors that transact with groups, who are not. So much for Fusion's "privilege." (The released Simpson testimony raises separate questions about whether Fusion internally treated the subpoenaed information confidentially, but that did not come up.)

One thing is for certain: now clarity has been reasserted. Even so, congressional Dems will continue to insist that Nunes "recused" himself and is obstructing the Russian collusion investigation. That's about as correct as the Washington Post piece, published five days before Judge Leon's decision, confidently prognosticating that Nunes's investigation of Fusion was "destined" to remain tied up in court. Does anyone in the MSM ever admit when he is wrong?

Note to Fusion GPS: If you're going to mouth off to the media and ignore the public record, you'd better be prepared to have your confidential documents subpoenaed.

That's the takeaway from last week's ruling by Judge Richard J. Leon, district court judge from the U.S. District Court for the District of Columbia, denying Fusion GPS's request for a preliminary injunction against TD Bank. The injunction would have stopped the bank from complying with a subpoena for bank documents served by the House Intelligence Committee relating to the oppo research firm's financial transactions with media and political clients from the period coinciding with its retention of Christopher Steele to compile the Russian dossier. The judge rejected the firm's arguments, in no small part because grandstanding by its principals and by prominent Democrats directly contradicted the firm's claims to be a victim of First Amendment and due process violations.

In the wake of the ruling, Fusion's lawyer vowed to keep fighting, but the transfer since then of the 70 documents at issue mooted any possible appeal. While the dispute is now resolved, in an age of "notional accuracy" in reporting, Judge Leon's decision bears emphasis. For a refreshing change of pace, it stands as a mini-case study in the fecklessness of flash. It is a little jewel of a decision in a grand tiara of legal maneuverings that sparkles with the value of nerdy lawyering over media-driven cant.

Which chronically retold lies or misunderstandings caused Fusion's fall last week from the constitutional-defensive moral high ground it took in protesting the handing over of its bank records with clients who, according to the House Intel Committee, had Russian companies as their clients? They are simple. They relate to the original formation of the House Intel Committee's probe into Russian collusion, as well as of the House Ethics Committee's investigation of committee chairman Representative Devin Nunes.

The latter ethics investigation was brought last April in response to accusations filed against Nunes by "several left-wing activist groups" with the Office of Congressional Ethics. The complaints, of which Nunes has since been cleared, alleged that he had made unauthorized disclosures of classified information. These related to his briefing of the White House and press, before he spoke to the committee, about certain documents provided to him by administration officials purporting to show evidence of questionable unmasking by Obama administration officials. In response, Nunes volunteered to temporarily relinquish the running of the Russian investigation.

Afterward, he stepped away, as promised. But in the months that followed, Dems complained that the Republican-dominated committee probe was tainted, despite Nunes's "recusal," due to his continuing interference in the investigation. What was the nature of this interference? He continued to issue subpoenas on tributary matters – for instance, those relating to emerging new reporting on the Uranium One deal. All this happened before the showdown last week over the Fusion subpoena, but what is noteworthy is that the motion attempting to block the subpoena reprised Democrats' version of committee events.

Indeed, Fusion swallowed whole the Dems' negative propaganda from last spring in its effort to thwart the committee's examination of its financial transactions. Specifically, it contended in its motion to the district court that the committee never collectively passed the required formal public resolution authorizing its investigation into Russian collusion. Further, since Nunes had "recused" himself from the investigation, such as it was, in issuing the subpoena to TD Bank, he acted ultra vires, or "outside the scope of his authority."

Now, compare this legal theory to the exact wording of Nunes's April 2017 announcement of his stepping aside in the wake of the then newly filed ethics charges:

Despite the baselessness of the charges, I believe [that] it is in the best interests of the House Intelligence Committee and the Congress for me to have Rep. Mike Conaway, with assistance from Reps. Trey Gowdy and Tom Rooney, temporarily take charge of the committee's Russia investigation while the House Ethics Committee looks into this matter.

And then this all-important fillip:

I will continue to fulfill all of my other responsibilities as [c]ommittee [c]hairman, and I am requesting to speak to the Ethics Committee at the earliest possible opportunity in order to expedite the dismissal of these false claims.

That is exactly what happened. But as already mentioned, the Dems, and in particular California's Rep. Adam Schiff, continued to assert that Chairman Nunes (a) recused himself from the committee's probe and (b) continued to "disrupt" the committee's work by "issuing subpoenas on his own," though he had relinquished his authority as committee chairman. Both of these characterizations were expressly wrong, based on the exact wording above of Nunes's public announcement – wording, it turns out, that was not in the least haphazard or empty political-speak, but rather a precise roadmap of the powers Nunes would retain.

But this was not spelled out – until last week. Without apology, Nunes continued to issue subpoenas, including a new and more expansive one to Fusion based on the news that had been emerging in the press in the months since the committee had begun investigating. When this hit home, Fusion regurgitated the Dems' misstatements to the court. The catch was that such allegations must be referred to and compared against the set of rules governing the matter to which they relate.

This, Judge Leon pointed out, could be found in the rules of the House of Representatives, which devolve authority, including subpoena authority, upon each committee to set its own rules over the areas over which it has oversight. Since the House Intel Committee's responsibilities include oversight of "the activities of the intelligence community," its own committee rules controlled. These, in turn, plainly required two things: first, for the formation of any investigation, the approval of the chairman and the ranking minority member, and second, for the exercise of the subpoena power, the authorization and signature of the chair.

It now becomes obvious why Nunes formulated his temporary absence from the investigation the way he did. By specifically not recusing himself, and by explicitly retaining the chairmanship, he ensured in one fell swoop the retroactive validity of the formation of the investigation and its continuing subpoena issuances. Since the ranking minority member was Adam Schiff, who at the time of the investigation formation was calling for blood, both the chairman and the ranking minority member were on record as proffering the required approval. And by issuing subpoenas in his capacity as chair (from which he had not recused himself), Nunes guaranteed the enforceability of the committee's subpoenas, a status they would not have had if he had allowed himself to be cowed.

Why and how Fusion thought it could convince a judge of Nunes's lack of authority to issue the contested Fusion subpoena is a bit of a wonder. A good guess is that it never read the pertinent sets of black-letter rules. Either that or the principals were so smitten with their role in the grand scheme of all things Russian that they brought this action without fully grasping that the rules actually matter. On the contrary, the rules, like the public record of Nunes's completely kosher temporary abdication, not only mattered, but were dispositive. As Judge Leon wrote in his ruling, "[i]ndeed, the Subpoena would be invalid without Chairman Nunes's signature[.]"

It is also conceivable that Fusion's motion, with its easily dispatched grounds for a preliminary injunction, was just part of a larger stonewalling pattern that is only now coming to an end. If so, a pattern within the pattern of delay and obfuscation recently noted by Chairman Nunes in a letter to Rod Rosenstein regarding the DOJ and FBI is suggested here, where shopworn legal theories seemed to have been recycled from the Trump administration's enemies. But he who laughs last... And it is surely worth a guffaw or two that Fusion's last argument, that its "confidential client relationships" would be leaked by the committee, thereby violating its First Amendment freedom of association, was rejected by the court on the basis that Fusion had no proof that the committee was responsible for past leaks.

A final word about Fusion's First Amendment and due process claims. These are noteworthy because the defense of "privilege" was raised repeatedly during Glenn Simpson's compelled testimony, the transcript of which was just released by Senate Judiciary Committee member Dianne Feinstein. (See in particular here and here.) Again, Judge Leon made mincemeat out of this prong of the preliminary injunction motion asserting that the subpoena was impermissibly broad. He cited a completely different and harder to meet standard applicable to judicial review of congressional investigations (versus general subpoenas) than was cited in Fusion's letter to Senator Grassley erecting its First Amendment and due process bulwark. According to the judge, the committee had more than established the required nexus.

As for Fusion's related assertion that it had the First Amendment freedom-of-association right to protect its client list, Judge Leon blew this away with his own line of cases. These distinguished among political, economic, religious, and cultural groups like the NAACP, who are entitled to First Amendment privacy, and the vendors that transact with groups, who are not. So much for Fusion's "privilege." (The released Simpson testimony raises separate questions about whether Fusion internally treated the subpoenaed information confidentially, but that did not come up.)

One thing is for certain: now clarity has been reasserted. Even so, congressional Dems will continue to insist that Nunes "recused" himself and is obstructing the Russian collusion investigation. That's about as correct as the Washington Post piece, published five days before Judge Leon's decision, confidently prognosticating that Nunes's investigation of Fusion was "destined" to remain tied up in court. Does anyone in the MSM ever admit when he is wrong?